First Community Bankshares, Inc. (NasdaqGS:FCBC) entered into an agreement and plan of merger to acquire Surrey Bancorp (OTCPK:SRYB) for approximately $120 million on November 17, 2022. The agreement and plan of merger provides for the merger of Surrey with and into First Community, with First Community as the surviving corporation. Under the terms of the agreement and plan of merger, each share of Surrey common and Class A common stock outstanding immediately prior to the merger will be converted into the right to receive 0.7159 shares of First Community common stock. First Community Bank and Surrey Bank & Trust have entered into a separate merger agreement providing for the merger of Surrey Bank & Trust with and into First Community Bank immediately following the merger of First Community and Surrey, with First Community Bank as the surviving bank. Edward (Ted) C. Ashby III, Chief Executive Officer and Director of Surrey and one other current member of Surrey’s Board of Directors will join the Board of First Community Bank. Additionally, Pedro (Peter) A. Pequeno, II, Surrey’s President, and other key executives and employees plan to join the First Community team. The Merger Agreement provides that in case of termination under certain circumstances, Surrey will pay a termination fee of $4.0 million to First Community.

Transaction is subject to customary closing conditions, including the approval of Surrey’s shareholders, the Registration Statement shall have been declared effective by the SEC, listing of all shares of First Community to be delivered as Merger Consideration and the receipt of all required regulatory approvals. The transaction received unanimous approval by both First Community’s and Surrey’s Board of Directors. All members of the Surrey Board of Directors owning shares have entered into support agreements to vote the shares of Surrey they own in favor of the transaction. The transaction is expected to be consummated in the second quarter of 2023. First Community expects the transaction to be minimally dilutive to tangible book value per share (non-GAAP) and to provide mid-single digit accretion to earnings per share.

Performance Trust Capital Partners, LLC served as financial advisor to First Community, and Sandra M. Murphy of Bowles Rice LLP served as legal counsel. Bill Wagner and Michael Sumbs of Raymond James & Associates, Inc. served as financial advisor and fairness opinion provider to Surrey. For services rendered in connection with the delivery of its opinion, Surrey paid Raymond James a fee of $250,000 upon delivery of its opinion. Surrey will also pay Raymond James a customary fee for advisory services in connection with the merger equal to approximately $1.4 million (less the fee paid upon delivery of the opinion, the amount of which shall be deducted), which is contingent upon the closing of the merger. Robert A. Singer of Brooks, Pierce, McLendon, Humphrey & Leonard, LLP served as legal counsel. Performance Trust Capital Partners, LLC acted as fairness opinion provider to the Board of Directors of First Community. Raymond James & Associates, Inc. acted as fairness opinion provider to the Board of Directors of Surrey. Surrey has also made arrangements with Regan & Associates, Inc. to assist it in soliciting proxies and has agreed to pay it approximately $12,500 for these services. Computershare Inc served as transfer agent to First Community.